Brian C. Newberry: Pension-reform talks rife with problems

Lost in the ongoing debate over Rhode Islandís 2011 pension-reform legislation, until recently, have been the unusual subsequent court proceedings. Even as the debate and vote unfolded in 2011, everyone...

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By
Brian C. Newberry
Posted Oct. 20, 2013 @ 12:01 am

Lost in the ongoing debate over Rhode Islandís 2011 pension-reform legislation, until recently, have been the unusual subsequent court proceedings. Even as the debate and vote unfolded in 2011, everyone involved was aware that the law would be challenged in court.

Anyone with standing has the legal ability to challenge the constitutionality of a statute. As far back as Marbury v. Madison, courts have had a fundamental duty to adjudicate the constitutionality of acts of the legislature. Within a short time following passage of the law, a coalition of aggrieved parties, led by several labor unions, filed suit, making a host of legal claims. That was as expected, but then events took an unusual turn.

The trial judge ordered the parties into mediation. As a trial attorney with considerable experience in the fields of professional malpractice and construction litigation, I am well familiar with mediation. Mediation, not to be confused with arbitration, is a consensual exercise. The parties to a civil dispute meet with a neutral third party to try to hammer out a negotiated resolution. It is a valuable tool for our court system and many a case has concluded successfully as a result.

It is not uncommon for judges to order parties to mediate, but although they have various ways to influence the process, judges cannot ultimately compel the parties to reach an agreement against their will. This is critically important.

The problem with the ongoing pension mediation rests with the fact that the General Assembly is not part of the discussions. The governor, as is his duty, defends the legality of the statute in court. The treasurer, likewise, has stepped up to its defense. As a result, they are the ďpartiesĒ to the case, intimately involved in negotiations.

But neither the governor nor treasurer has the power to reach a binding agreement. The Pension Reform Act is a statutory creation. A judge has the power to rule that statutory mechanism unconstitutional, but no one ó including the court, governor or treasurer ó has the power to ignore or even change the statute. Only the Assembly has that power.

This is not about the governor or the treasurer, nor about the union plaintiffs. It is about the proper and lawful exercise of governmental power. The governor and treasurer have the ability to informally discuss compromises, but any plan they may agree to will have to be ratified by the General Assembly.

It would be a complete abdication of our responsibility as legislators to simply rubber stamp a compromise that had been agreed to by others ó regardless of its terms. Alternatively, even if the Assembly fully vets and debates any such compromise, to the extent we alter it at all before passage, we are, by definition, changing the agreed-to compromise. That will leave one of the bargaining sides (or both) unhappy, feeling that the deal they had agreed to had not been reached in good faith. This is a recipe for disaster.

There are two other problems with a negotiated settlement.

First, although the plaintiff unions might agree as part of a negotiation not to challenge the constitutionality of a revised statutory reform, the unions neither represent nor can bind retirees. No union can prevent an aggrieved individual from filing his or her own separate suit to challenge the constitutionality of any negotiated settlement.

Second, part of the rationale for the original pension reformís constitutionality was that the dire fiscal consequences of the existing system mandated a legislative change even if it meant breaching an implied contract between the state and its employees/retirees. Contrary to the belief of many, contracts can be (and are) legally broken, but only under certain circumstances.

If the painful pension reform of 2011 can be modified by negotiation so soon after its passage, it suggests the rationale for upholding the constitutionality was a sham, undercutting both the original reform as well as any negotiated modification.

Rumors abound that Treasurer Gina Raimondo is close to signing off on a settlement. This sets the state on a dangerous path. Such a decision would go completely against all signals sent by the treasurerís office both before and immediately after the passage of the 2011 law. Nothing, perhaps aside from internal polling with respect to a Democratic gubernatorial primary, has changed since then.

The 2011 Pension Reform Act was a seminal event in recent Rhode Island legislative history, with dramatic long-term consequences for every resident of the state. It should be neither the subject of secret negotiation nor a pawn in a gubernatorial race. We, all of us, need the court to rule and we need some finality to this very important issue.

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Brian C. Newberry, of North Smithfield, is the minority leader of the Rhode Island House of Representatives.